15th December 2016


Little boy, breaking his piggy bank, emptying all saved money to buy gift for mother's day

Financial habits are formed by the age of seven, according to research by Cambridge University1 for the Money Advice Service. By this age, the report says, most children in the UK are capable of complex functions such as planning ahead, delaying a decision until later, and understanding that some choices are irreversible.

Although learning about money is now part of the national curriculum for secondary schools in England, it isn’t specifically included in junior school lessons. However, there are many ways of gently introducing younger children to the world of finance.


Junior Individual Savings Accounts (JISAs) are a good way for children to learn about the value of saving money for the future.

The advantage of a JISA is that they are tax free, and once the account has been opened by the parent or guardian, anyone can make contributions, including grandparents, friends and family. The savings limit for the current tax year is £4,080. Children gain control of their JISA at age 16, but the money cannot be withdrawn until the child is 18.

At that point, the account is automatically rolled over into an adult ISA, a valuable facility for those who want to continue saving or investing tax-efficiently.


It can be an important life lesson for older children to learn how credit cards work, and how interest and charges are calculated, and how they can mount up if the balance isn’t cleared each month.

When it comes to borrowing money, they need to know that there are many different types of loan available and that it’s important to understand how to compare charges and interest rates.

It’s also worth explaining to teenagers the value of having a good credit score and how this can improve their financial chances when the time comes to enter into big financial transactions like taking out their first mortgage.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

1 Cambridge University research for Money Advice Service, Habit formation and learning in young children, 2013


Bulls and Bears No one is quite sure where the often used stock market terms, bulls and bears, came from. Some say that it has to do with each animal’s basic characteristics. It may be because bulls use their horns to pitch their opponents up into the sky, while bears swipe down with their claws. Or it could be that bulls tend to charge ahead, while bears hibernate and prepare for a long winter.

A bull market

A bull market usually occurs when the economy is performing well, there are plenty of jobs around, businesses are prospering and the future outlook is bright. Selecting stocks in a bull market is relatively easy as stocks and shares prices are generally on the rise. So, if a person is optimistic about investments they are said to be ‘bullish’. However, bull markets eventually run out of steam.

A bear market

When the economy slows, business confidence ebbs and company profits dwindle, stock market prices tend to fall. This is termed a bear market, and someone who believes shares are going to fall is said to be ‘bearish’. Like bull markets, bear markets don’t last forever.


Background of passport stamps on white

For most of us, our summer holidays are just too short. So it’s hardly surprising that more and more employees are thinking about taking an extended break to travel the world, fulfil a lifetime ambition, recharge their batteries or become a volunteer, for example.

A sabbatical is a period of time away from work, granted by your employer. In some companies it’s referred to as ‘a career break’ or even ‘an adult gap year’. They are usually unpaid.

A recent surveyshows that almost a third of UK professionals anticipate taking a sabbatical of at least six months from work before they retire. Travel often features in what people plan to do during their extended break (51%), followed by spending more time with their family (30%) and studying or learning a new skill (18%).


Some employers regard sabbaticals as an important part of an employee’s career as they offer a chance to study, research, travel, or do voluntary work. Employers who grant them usually attach various conditions, both in respect of eligibility for a period of extended leave, and what happens during and at the end of the sabbatical. Before taking advantage of the extra time away from their job, employees should ensure they understand what the terms on offer mean for their salary, benefits and pension entitlement.


Enjoying an extended break requires forethought and financial planning. Paying for travel as well as the ongoing bills such as the mortgage and other household expenses can add up to a considerable sum, and could quickly eat into savings.

The majority of those surveyed (55%) had already started to make financial provision and a further 29% intended to do so. 60% of those surveyed intended to continue to pay into their pension and long-term savings plans.

If you need help ensuring that you have enough saved to take a major break from work, then talk to us about the range of savings and investment options available to help you make your dream a reality.

1 Investec Wealth & Investment, Professionals target pretirement sabbaticals, May 2016


Top management has big golden egg (idea) outdoor

If you’re approaching your 40th birthday, you may be approaching your earnings peak. Figures from the Office for National Statistics1 show that workers can expect to reach their peak between ages 40 and 49.

Turning 40 is a major milestone. By this age, many people find that their main concerns lie with the day-to-day needs of bringing up and providing for their family. Few people of this age have taken all the steps they should to ensure that their finances are adequately prepared for the future.


If your partner, children or other relatives depend on your income to cover the cost of paying the mortgage and other living expenses, then it makes good financial sense to think about the protection and peace of mind that life insurance can provide in the event of your death. Research2 shows that couples with mortgages who are bringing up families very often don’t have any protection policies in place. Amongst 35 to 44 year olds; just 43% of them have any life cover. There’s a variety of plans available on the market which can be tailored to your needs, and you can add on additional cover for critical illness and income protection too.

It’s really important to think about how you want your wealth to be passed on in the event of your death and to make your Will. Not having one could create a lot of heartache for your family.


Putting as much as you can comfortably afford into your pension now means you’ll get the benefit of tax relief and give your money time to grow. Within annual and lifetime allowances, the tax man also applies valuable tax relief on contributions.

The longer you leave before contributing to your pension, the more you’ll need to save in order to help ensure you have a reasonable fund at retirement.

1 Office for National Statistics, Public and private sector earnings, 2014

2 AA Life Insurance, AA/Populus study, May 2014


Business People Commuter Walking City Concept

The announcement of the result of the UK’s EU Referendum on Friday 24 June came as a shock to many people at home and abroad. Within hours David Cameron had announced his resignation. The pound fell to its lowest level against the dollar for over 30 years. Stock markets around the world lost ground on the news. The UK was stripped of its triple A credit rating.

By 16 July the new Prime Minister, Theresa May, made it clear that “Brexit means Brexit and we will make a success of it.”


From a consumer perspective there is some good news around. Incomes are rising and employment is at an all-time high. House prices have yet to fall far from their prereferendum levels.

While stocks and shares initially fell sharply on the news, both the FTSE 100 and FTSE 250 have recovered ground. The fall in the value of the pound is good news for exporters as their products become cheaper for foreign buyers; the devaluation acting as an enticing discount.

The Bank of England’s Monetary Policy Committee has introduced a rate cut to 0.25% and has indicated that further stimulus measures could continue to be applied if necessary to steady the economy. The new Chancellor, Philip Hammond, has made it clear that many austerity measures will be relaxed to stimulate the economy. All eyes will be on the Autumn Statement.

So, all in all, many commentators conclude that the impact so far has been rather less pronounced than some had predicted. There will no doubt continue to be good and bad economic news in the coming months as events unfold. In the short term, it’s widely accepted that there will be shocks in currency, shares and property markets ahead. But for now, there is no reason to panic, and every reason to adopt a ‘wait and see’ stance.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.


Hashtag Millennials appearing behind torn brown paper. Millennials, also known as Generation Y, are the demographic cohort following Generation X.

There’s growing evidence that when it comes to savings and investments, Millennials have a completely different perspective from their parents and grandparents. Those born in the early 1980s through to the turn of the century, the Millennials as they have come to be known, followed on from Generation X, who in turn succeeded the Baby Boomers.

Some of the biggest influences on this  group have come from the widespread  introduction of technology and the rise of  social media. In an increasingly connected  world, where global news and events  are instantly flashed around the internet,  Millennials are constantly attuned to  the many challenges facing the world.  Their outlook on life has been shaped  by experiencing world events such as  turmoil in financial markets, environmental  disasters and increasing evidence of  climate change.


Millennials also expect to see a stronger  set of social values reflected in the financial  products and services they buy. They are  likely to spend considerable time online  researching alternatives and consulting  multiple sources before making major investment decisions.

When it comes to saving and investing, as well as considering likely returns, younger  investors are keen to find out more  about the companies they are thinking of  investing in. They will want to know what  their attitude is to issues such as corporate  social responsibility, climate change, responsible sourcing of raw materials and wage rates paid to overseas workers. Forward-thinking fund managers are increasingly developing values-based investment products and services that take  account of these increasingly discerning financial consumers.


Question marks. Idea or problem concept. 3d

Every walk of life has its  own particular terminology  and expressions that can  seem baffling to the outsider.  The world of investment is  no exception; if you put your  money into stocks and shares,  you are likely to be confronted  with a whole range of concepts,  words and phrases that you  may not have come across  before. Here we look at some of  the common jargon in use and  explain what it means for you.


You will probably have heard this term  quite a lot recently. Volatility refers to the  rate at which the price of a stock or share  moves up and down. If the price moves  up and down rapidly over a short period  of time, it is described as having high  volatility. If the price remains relatively  stable, it is said to be a low volatility stock.  Needless to say, investors generally prefer  lower volatility.


This refers to the amount of investment  risk you are prepared to take with your  money. Your adviser will run through a  set of questions with you to assess your  profile so that they can recommend the  right investments for your portfolio. Risk  is closely related to reward, with riskier  investment offering a greater chance of  reward, but also the risk of greater losses  if the stock or share performs badly. Your  attitude to risk will probably change over  the years.


The process of deciding what proportion  of your investment portfolio should be  invested in different types of investment is  referred to as asset allocation.  There are four main categories of assets  – cash, equities, bonds and property. The  process of determining which mix of assets  you should hold in your portfolio is a very  personal one, and will depend largely  on your time horizon and your attitude  to risk. Asset allocation helps to spread  risk through diversification, which put  simply, means not putting all your eggs in  one basket.


Collective investments – also called pooled  investment funds – are a way of putting  sums of money contributed by many people  into one large fund spread across a wide  range of investments. The resulting fund is  managed by a professional management  team. This type of investment represents a  good way of diversifying your investment,  and represents less of a risk than buying  individual shares in just a few companies.  Unit Trusts, Investment Trusts and Openended  Investment Companies (OEICs)  are all examples of collective investments,  though their pricing arrangements differ.


Platforms help investors and their advisers  buy investments, hold them in a structured  online environment, analyse them as they see  fit, and when the time comes, sell them.  Online platforms are like electronic filing  cabinets. They cut down on correspondence,  use leading-edge technology and provide  a secure environment that enables you to  hold all your assets in one place, and view  them whenever you like. Platforms are now  well-established in the UK, and over 90% of  advisers regularly use them in some shape  or form.

The value of investments can go  down as well as up and you may  not get back the full amount you  invested. The past is not a guide  to future performance and past  performance may not necessarily  be repeated.


Earnings per share explained

Earnings per share (EPS) is a simple  formula used to assess a company’s  profitability; it shows how much of a  firm’s after-tax profits belong to each  ordinary share. It’s calculated by dividing  a company’s net earnings by the number  of shares issued. So if Company A had  net earnings of £1m and 200,000 shares  issued it would have an EPS of 5 (500p);  if Company B had net earnings of £1.6m  and 400,000 shares issued, it would have  an EPS of 4 (400p).

The most common use of EPS is to calculate  the price-earnings (P/E) ratio, which helps  put EPS into context. The P/E is calculated  by dividing a company’s share price by its  EPS. This is one of the most widely-used  ways of assessing a share’s value when  compared to its peers. A highly valuable  ratio to employ.

Looking at the P/E ratio is a good way of  comparing shares, particularly those in  the same sector; investors normally choose  shares with a low ratio rather than one with  a high ratio, as they are getting more of the  company’s earnings for their money.

It is important to take professional advice before making any decision  relating to your personal finances. Information within this newsletter is  based on our current understanding of taxation and can be subject to  change in future. It does not provide individual tailored investment advice  and is for guidance only. Some rules may vary in different parts of the UK;  please ask for details. We cannot assume legal liability for any errors or  omissions it might contain. Levels and bases of, and reliefs from taxation,  are those currently applying or proposed and are subject to change; their  value depends on the individual circumstances of the investor.  The value of investments can go down as well as up and you may not  get back the full amount you invested. The past is not a guide to future  performance and past performance may not necessarily be repeated. If  you withdraw from an investment in the early years, you may not get  back the full amount you invested. Changes in the rates of exchange may  have an adverse effect on the value or price of an investment in sterling  terms if it is denominated in a foreign currency. Taxation depends on  individual circumstances as well as tax law and HMRC practice which  can change.  The information contained within this newsletter is for information only  purposes and does not constitute financial advice.